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Flashcards in 18- FM Environment Deck (8)
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1

what is a reverse yield gap?

reverse yield gap is where the yield on debt is greater than that of equity

2

What are the common roles of the treasury function within a firm?

Short term management of resources
Risk management
Long term maximisation of shareholder wealth

3

What are examples of market failure where regulation may be a solution?

Imperfect competition
Social costs or externalities
Imperfect information

4

how can imperfect competition be addressed

Imperfect competition can be addressed by a competition regulator to prevent consumers being taken advantage of, for instance by a firm with monopoly power

5

how can social costs be addressed

Social costs or externalities can be regulated against by imposing fines on firms that create them, for instance where a factory emits too many greenhouse gas

6

how can imperfect information be addressed

imperfect information can be legally addressed by ensuring full disclosure, for instance on the launch of a bid for stock market flotation, so as not to disadvantage purchasers of shares

7

What should the audit committee consist of

Non executive directors

8

In order to eliminate a balance of payments deficit, the government may?

A government may intervene to weaken its country’s exchange rate in order to eliminate a balance of payments deficit